Why we started OpenSCHUFA and why you should care about credit scoring

Germany’s leading credit rating bureau, SCHUFA, has immense power over people’s lives. A low SCHUFA score means landlords will refuse to rent you an apartment, banks will reject your credit card application and network providers will say ‘computer says no’ to a new Internet contract. But what if your SCHUFA score is low because there are mistakes in your credit history? Or if the score is calculated by a mathematical model that is biased?

The big problem is, we simply don’t know how accurate SCHUFA’s or any other credit scoring data is and how it computes its scores. OpenSCHUFA wants to change this by analyzing thousands of credit records.

This is not just happening in Germany, or just with credit scoring, for example the Chinese government has decided to introduce a scoring system by 2020 that assigns a “social value” to all residents. Or think about the Nosedive episode of the Black Mirror series.

We want to
- start a discussion on that topic
- bring more transparency towards (credit) scoring
- empower people with their own data and show what can be done once this data is donated or crowd-shared

What exactly is SCHUFA?

SCHUFA is Germany’s leading credit rating bureau. It’s a private company similar to Equifax, Experian or TransUnion, some of the major credit reporting agencies operating in the US, UK, Canada or Australia.
SCHUFA collects data of your financial history – your unpaid bills, credit cards, loans, fines and court judgments – and uses this information to calculate your SCHUFA score. Companies pay to check your SCHUFA score when you apply for a credit card, a new phone or Internet contract. A rental agent even checks with SCHUFA when you apply to rent an apartment. A low score means you have a high risk of defaulting on payments, so it makes it more difficult, or even impossible, to get credit. A low score can also affect how much interest you pay on a loan.

Why should you care about SCHUFA score or any other credit scores?

SCHUFA holds data on about 70 million people in Germany. That’s nearly everyone in the country aged 18 or older. According to SCHUFA, nearly one in ten of these people living in Germany (around 7 million people) have negative entries in their record. That’s quite a lot.

SCHUFA gets its data from approximately 9,000 partners, such as banks and telecommunication companies. SCHUFA doesn’t believe it has a responsibility to check the accuracy of data it receives from its partners.

In addition, the algorithm used by SCHUFA to calculate credit scores is protected as a trade secret so no one knows how the algorithm works and whether there are errors or injustices built into the model or the software.

So basically, if you are an adult living in Germany, there is a good chance your life is affected by a credit score produced by a multimillion euro private company using an automatic process that they do not have to explain and an algorithm based on data that nobody checks for inaccuracies. And this is not just the case in Germany, but everywhere were credit scores determine everyday life.

How can you help?

Not living in Germany? Money makes the world go round.

Please donate some money – 10 EUR, we also do take the GBP or USD – to enable us to develop a data-donation software (that is open source and re-usable also in your country). Get in touch, if you interested in a similar campaign on the credit bureau in your country: openschufa@okfn.de

How does the data donation work?

We need as many people living in Germany as possible to order their SCHUFA credit record and donate the record to OpenSCHUFA . The more records we can evaluate, the more accurate our findings will be, and the more transparent SCHUFA’s scoring process will become for everyone. You can immediately request for your free SCHUFA credit record by going to selbstauskunft.net. It will take some weeks to arrive by postal mail. Once the data donation platform is ready in May 2018 (financed by your donation) you’ll be able to upload your credit record together with some demographic information we need to make sense of the data.

STEP ONE: Request your SCHUFA record

Everyone in Germany is entitled to obtain a free copy of their credit record once a year (you can apply more often, but you have to pay a fee after the first application).

The easiest way to apply is to use the site selbstauskunft.net (currently only in German).

After a few weeks, you will receive a copy of your SCHUFA credit record in the post.

STEP TWO: Upload your SCHUFA record to OpenSCHUFA

Go to our site OpenSCHUFA.de, which will offer the upload functionality in May 2018.

Scan or take a photo of your credit record (the main table, no personal data)

Upload it to the site

We will ask a few questions about you, such as your age, gender, country of birth, income, postcode, number of children, number of mobile phone contracts, how often you have moved in the past two years, how many lines of credit you open and how often you have missed credit payments. Providing this data will be completely voluntary but the more you provide, the more it will help us analyze SCHUFA’s algorithm for discrimination.

What will OpenSCHUFA do with my data?

OpenSCHUFA has gathered a group of data scientists, including data journalists from Bayerischer Rundkfunk, a state broadcaster, and Spiegel Online, the German news site, who will analyze the credit data together with us.

We start publishing the first findings around July, with the final evaluation in November 2018. We will also try to make as much of the data as possible available as open data for other researchers to use – but only data that cannot be traced back to an individual.

How will you protect my data and make it anonymous?

We are only interested in the main table of your SCHUFA record. We are not interested in your name, your birth date or your address. We will ask for additional demographic information to be able to analyse the data of the SCHUFA record more exact, to ascertain how different profiles are treated differently by the SCHUFA. Your identity is not relevant for us.
The data you donate to OpenSCHUFA will only used to analyze the SCHUFA scoring process. It will neither be forwarded to third parties nor sold. The data will be transferred with an end-to-end encryption and stored on our server.